Fly high for free – with your credit card

Contributor

AIR mile loyalty schemes took off 30 years ago and, today, many of the Gulf’s retail financial institutions tout them to promote their products, where there’s often little competitive edge on the rates offered.

Credit cards are the most common product to offer air miles. Providers often offer miles in partnership with one or a group of airlines in line with the card’s target demographic.

Big business

Air miles have their roots in the 1990s, when American airlines started selling billions of miles to partners such as credit card providers, hotel chains and car rental agencies, who used these as an incentive for consumers to buy their own services.

It’s big business. As of January 2005, a total of 14 trillion frequent-flyer miles had been accumulated by people worldwide, with a total value of $700 billion.

For some, it is an obsession: so-called mileage runners congregate on websites such as FlyerTalk.com, which claims to be “the world’s most popular frequent flyer community”.

Taking advantage of such schemes can be highly lucrative. In 2000, US resident David Phillips spotted the opportunity to earn 1.25 million frequent flyer miles by buying more than 12,000 cups of chocolate pudding. Phillips estimated that by spending $3,140, he had enough air miles for 21 trips to Australia and back, worth as much as $150,000.

Smart selection

While it might not net you that much of a saving on jet-setting, it pays to be savvy.

Generally, schemes operate a simple “earn miles as you spend” model. Different cards offer a different number of miles per dollar spent, most commonly around one to two miles.

There are some inconsistencies. For example, Citibank Bahrain offers three miles per dollar spent on the card, whereas Citibank UAE offers only two miles per dollar spent.

It’s important to choose a credit card that offers a scheme related to the airline you fly with most regularly – perhaps one that flies to where you have family or a second home.

National Bank of Oman offers the Al Amiyal Oman Air credit card, allowing you to use miles when flying with that airline. Users of the SAMBA Al Fursan credit card earn miles with Saudi Arabian Airlines. And with the Emirates NBD Skywards Infinite credit card you can earn miles for use with Kingfisher Airlines, Jet Airways, Korean Air, South African Airways and United Airlines.

Dubai resident and Cypriot national Anna Al Hage, 29, chose her airline and selected a partner credit card based on the miles offered.

“I spend a lot of the summer in Cyprus and Emirates flies directly home,” she said. “For every dollar spent on the card, my husband and I get two miles, which really does encourage us to spend as much as possible: we put all of our household and personal expenses on it.”

Special offers

The amount of miles earned can be higher during introductory periods. There are other introductory sweeteners and benefits, too. The Emirates NBD Skywards Infinite card gives a complimentary five-night stay in a Marriot Hotel as an introductory bonus, while United Arab Bank and Air Egypt have a co-branded credit card which allows you to pay for Air Egypt flights over a six month period at 0% interest.

As well as miles, the Citibank UAE credit card gives unlimited access to more than 60 airport lounges and up to 15% discount on flights with Gulf Air, Egypt Air and Sri Lankan Airways.

Beware pitfalls

Watch you don’t carry a balance, though: the interest you will be charged will vastly outstrip the air miles collected.

“If you can clear your balance every month, you can really make the system work for you,” said Al Hage. “Last year, after putting some big expenses on the card – like school fees and car insurance – I managed to bag one free return flight to Cyprus and one free-upgrade on the return leg.”

Other than investigating the rate of air miles accrual and other benefits, check how you can actually claim the miles. Some schemes let you redeem miles only during certain periods, or have a cap on how many can be used at one time. Card holders often only discover this when they come to book their flights, so check the fine print on the redemption rules before signing up.

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Do you have a credit card that offers air miles? How useful do you find it? Tell us below!